Sri Lanka’s Softlogic Finance rights oversubscription caters to private sector credit demand

Mar 26, 2015 (LBO)-Sri Lanka’s Softlogic Finance PLC’s said its rights issue which was over-subscribed by over 150 per cent with the new equity infusion of 401 million rupees, came at an opportune time with demand for credit by the private sector showing notable increases on the back of reduction of interest rates to multi-year lows. The company said with the new equity infusion the total equity position of the company boosted to 1.9 billion rupees. “Softlogic Finance PLC is greatly pleased at the resounding demonstration of confidence in the company and endorsement of its strategy, by both existing shareholders as well as new investors, especially at a time of bearish sentiment in the stock market,” Ashok Pathirage, Chairman of Softlogic Finance PLC was quoted as saying in a company statement. “The capital infusion will add significant further impetus to Softlogic Finance’s journey to achieving its vision of becoming the preferred non-banking financial institution in Sri Lanka.” The issue is expected to enhance the capital structure and facilitate the aggressive business plans of the company. Softlogic Finance is a subsidiary Softlogic Group that has interests in healthcare, retail, financial services, ICT, leisure, automobiles and restaurants. The rights issue, in which 10 ordinary shares were issued at 30 rupees per share for every 28 ordinary shares held by shareholders as at 26th February 2015.
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The company received applications for over 20.1 million shares – with over-subscriptions exceeding 6.7 million shares. Applications for 13,376,411 shares at 30 rupees each were accepted by the company and applications were closed on 16th March 2015. In addition to expanding the capital base of Softlogic Finance PLC the equity infusion is required to facilitate the high growth path of the Company, that has seen its total assets increased to 20 billion rupees, an increase of over 10X times within 4 ½ years, compared to an asset position of 1.8 billion rupees when the Softlogic Group acquired the company. Based on the most recent financials of 31st December 2014, the company’s total assets grew by 23 percent, whilst loan advances increased by 21 percent to reach 14.3 billion rupees. Customer deposits grew to 11.7 billion rupees whilst recording an increase of 54 percent compared with the previous year.
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The company’s Leasing and Hire Purchase (HP) portfolio that saw Profit After Tax (PAT) for the nine months subsiding to 153 million rupees, which was yet an increase of 38 percent compared to the previous year. Net interest income increased 23 percent to 1.1 billion rupees and total income rose by 32 percent to 1.4 billion rupees.